Council on Foundations Applauds Important Changes in Financial Action Task Force (FATF) Policy
NPOs no longer considered “particularly” vulnerable
The Council on Foundations, a member of the Global NPO Coalition on FATF, applauds the Financial Action Task Force’s (FATF) recent update to its counter-terrorism recommendation on NPOs, specifically grantmakers.
The Council hails the removal of the long-standing characterization of nonprofits as “particularly vulnerable” to terrorist abuse from Recommendation 8 (R8). The previous language ignored existing grantmaker due diligence and led to overregulation and inappropriate restrictions on NPOs, hampering their legitimate and essential work around the world. The policy changes were approved at FATF’s Plenary in South Korea on 22-24 June, see http://www.fatf-gafi.org/publications/fatfgeneral/documents/plenary-outcomes-june-2016.html#npo.
The Council is gratified to see that the new wording of Recommendation 8 clearly acknowledges that not all NPOs are at risk and directs countries to undertake a risk-based approach when considering counter-terrorism financing measures. We advocated for such revisions, and copies of our recommendations and letters submitted to FATF can be found on our Global Philanthropy page: http://www.cof.org/public-policy/global-regulation-philanthropy.
In addition, revisions to the accompanying Interpretative Note (R8IN), along with the June 2015 Best Practices Paper, will assist countries in taking a more proportional approach towards the sector. We expect to see the revised standards implemented soon at national level.
The impact of the revision of Recommendation 8 on the NPO sector cannot be underestimated. As an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering and terrorist financing, FATF has far-reaching influence on national governments’ regulation of the charitable sector. More than 180 jurisdictions worldwide are committed to the implementation of its Recommendations.
FATF has committed to strengthening its engagement with the NPO sector. While dialogue with the NPO sector has been formalized over the past year, the sector calls for further improvements in the consultation process, proposing the development of written guidance for engagement with NPOs to enable the same meaningful participatory practices adopted by other multi-lateral entities.
About the Council on Foundations
An active philanthropic network, the Council on Foundations (www.cof.org), founded in 1949, is a nonprofit leadership association of grantmaking foundations and corporations. It provides the opportunity, leadership, and tools needed by philanthropic organizations to expand, enhance and sustain their ability to advance the common good. With members from all foundation types and sizes, the Council empowers professionals in philanthropy to meet today’s toughest challenges and advances a culture of charitable giving in the U.S. and globally.